Bristol-Myers Squibb (NYSE:BMY) is scheduled to announce its Q1 earnings on April 26. We expect the company to post steady growth led by its oncology and cardiovascular drugs, primarily from Opdivio and Eliquis. These two drugs combined accounted for more than 45% of the company’s overall revenues in 2017, and we expect the contribution to increase in the coming years. We continue to expect that Oncology drug sales will remain a key growth driver for BMY in the near term, primarily led by label expansion of Opdivo and Yervoy. We have created an interactive dashboard on BMY’s expected performance in 2018. You can adjust the revenue and margin drivers to see the impact on the company’s performance.

The Oncology segment accounts for 65% of the company’s overall value, according to our estimates. This can be attributed to the success of Opdivo, which will likely further increase its market share with label expansion and different combinations being tested under phase 3 trials. In fact, the company’s recent multi-billion dollar collaborative agreement with Nektar Therapeutics will allow it to maintain its leadership role in the immuno-oncology market (read More – The Importance Of The Nektar Therapeutics Deal For Bristol-Myers Squibb). According to our estimates, Oncology is the company’s only segment with solid revenue growth visibility in the coming years, while we forecast most of the other segments to see revenue declines, as patents for many drugs within the other segments have expired or are going to expire in the near term.

Other than Oncology, the company’s Cardiovascular segment is expected to perform well in the near term. The growth will primarily be led by higher demand given the drug’s increased acceptance and market share gains. It should be noted that Eliquis sales jumped 46% to $4.9 billion in 2017, and we estimate single digit growth to $5.2 billion in 2018.

Meanwhile, Virology drugs will likely decline in 2018, as some of the company’s key drugs have lost patent exclusivity. Immunology drugs are also expected to decline given that a key drug – Orencia – lost its exclusivity in the EU in 2017, and its exclusivity in the U.S. will expire this year. Further, mature drugs are on a decline as they face competition from other drugs and biosimilars, and we expect the downtrend to continue in 2018 and beyond.

Overall, we believe the company’s Q1 growth will be led by Opdivo and Eliquis. We expect the company to post EPS of $3.20 in 2018. We use a price to earnings multiple of 19 for the company’s 2018 earnings, which is slightly lower than most of the estimates for the sector, reflecting the risk of biosimilars to BMY’s drugs, to arrive at our price estimate of $60 for Bristol-Myers Squibb. This implies a premium of over 15% to the current market price.

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